Mining company
AngloGold Ashanti has sold the last of its South African businesses, in a R4.4 billion transaction
with Harmony.

The deal, announced
this week, brings to a close the long history the firm, and its predecessors,
has had in South Africa.

AngloGold has its
roots in multinational mining company Anglo American, started by Ernest
Oppenheimer in 1917. At its prime, the company was one of the world’s leading
gold miners.

Anglo American originally
focused only on developing and expanding the country’s East Rand gold mines,
and saw massive expansion by tapping into the rich goldfields of the Vaal Reef
and Free State.

It used this to
expand and diversify into several other fields over the course of its history.
In 1926, Anglo American became the single largest shareholder in diamond
company De Beers, and Oppenheimer later became chairman of the company.

Two years later, the
company established the precursor to Anglo American Platinum, by partnering
with Hans Merensky, and by 1945 it had moved into the coal industry through
acquisition of Coal Estates.

By the 1960s, Anglo
American had further diversified by opening its first uranium plant in Gauteng,
and it then created the Swaziland Iron Ore Development Company.

The company made
their first global move in 1961 by investing in Canadian mining company Hudson
Bay Mining and Smelting Company.

In the 1970s, it set
up an office in Brazil - a move that would lead to new interests in gold,
nickel, niobium and phosphates, and iron ore across the country.

In 1998, the company
consolidated its interests in gold and uranium by forming AngloGold. Later that
year, AngloGold became the first South African company to list on the New York
Stock Exchange.

It changed its name to AngloGold Ashanti after the 2004 merger with Ghanian company Ashanti Goldfields. In 2006, Anglo American began reducing its stake in
AngloGold Ashanti and by March 2009, the
company had sold its remaining shares in AngloGold Ashanti, officially marking
their exit from investing in gold.

Now, eleven years
later, AngloGold Ashanti has sold its last South African assets to Harmony Gold in a
deal worth about R4.4 billion.

Since taking control
of the company in 2018, Chief Executive Officer Kelvin Dushnisky has shifted
the company’s focus towards more profitable mines in Australia, Ghana, and the
Americas.

Two years later, AngloGold
only had two South African assets left: its Mponeng mine in
Carletonville, the world’s deepest gold mine - as well as its Mine
Waste Solutions business, a mining waste retreatment
operation.

Both were
sold to Harmony Gold for about R4.4 billion, at a steep discount to their accounting
values.

Harmony, backed by
African Rainbow Minerals, has been looking for new opportunities as reserves at
its South African mines continue to decline.

Why international miners are leaving SA

It
was no surprise that AngloGold wanted to sell its South African mines, says Jean
Pierre Verster, CEO of
Protea Capital Management. The company signalled this intention since
last year.

Verster
says that operational problems, particularly labour strikes and load shedding,
have likely contributed to this decision – as has political risk.

While talk of
the nationalisation of mines has died down, SA’s third mining charter, which requires 30% black
ownership for companies that apply for mining rights and has much stricter
procurement rules, is seen as a deterrent. Importantly, the proposed new
charter follows shortly after the previous one – and mining companies now want
a guarantee that the new mining charter will be in place for at least a decade. But
the charter says the Minister of Mineral Resources and Energy can change it
at any time.

SA’s biggest gold producer Sibanye Gold
last year said that it was not spending new capital to grow its SA operations
as the investment climate is “not yet conducive to make decisions that require
billions of rand.

Other multinationals have exited South Africa for similar
reasons. Gold Fields, which has been doing in business in South Africa since
1887 when it was formed by Cecil John Rhodes, has a only one South African mine
(South Deep) left.

And five years ago, BHP Billiton – which has partial roots in a company formed in Johannesburg in 1895 – spun off its South African
assets in a separate company called South32. South32
sold its local coal assets at the end of last year.

The Public Investment Corporation, the manager of South African civil servant pensions, remains one of the largest shareholders in AngloGold, which remains listed on the JSE – for now.